Virtual currency

Bitcoins are currently the most popular form of virtual currency. According to its website, Bitcoin is a low-cost way for people to exchange money online, without the interference of banks or any centralized authority. Bitcoins are produced online and can be purchased by anyone. Online business can accept bitcoins as payment or the coins can be converted into dollars, euros, or other currencies. The value of your bitcoin(s) is stored in a heavily encrypted online wallet, from which you can send and receive the currency. However, at the moment, bitcoin is still considered a high-risk investment as the price/value of the coins is not regulated and can fluctuate wildly over short periods of time. While the makers of Bitcoin see it as a revolution of the global economy, there are dozens of ethical and policy issues surrounding this new currency, including: how to tax it, money laundering, the purchase of illegal goods, and hacking into bitcoin wallets. The anonymous nature of bitcoin activity makes transactions very difficult to track.

Bitcoin is not the only virtual currency out there. There is Litecoin (which promises faster transaction times), Primecoin (which “introduces the first scientific computing proof-of-work to cryptocurrency technology”), and Peercoin (which uses a “proof-of-stake/proof-of-work hybrid system for coin generation”), among others.

So what’s the future of a currency that has no worth other than what others are willing to pay for it? Will Bitcoin lead a revolution in currency, or go the way of the Zimbabwean dollar?